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Entrepreneurship The Practice and Mindset 3th Edition by Heidi M. Neck (Author), Christopher P. Neck, Emma L. Murray
Chapter 1-
Case Notes
Chapter 1: Practicing Entrepreneurship
Case Study: Siete Family Foods, the Garza Family
Case Summary
Siete Family Foods, founded in 2014 by the Garza family, is an Austin-based company specializing in grain-free, gluten-free, and dairy-free Mexican American foods inspired by their heritage. The Garzas transitioned from making tortillas in their home kitchen to a successful business with over 60 products sold in 16,000 retailers, including major chains like Walmart and Whole Foods. By 2018, Siete had expanded significantly, achieving $ million in annual sales and employing over 100 people. Their mission includes supporting other Latino-owned brands through initiatives like the Juntos Fund, furthering their goal of becoming a leading global food brand. Analysis
The story of Siete Family Foods exemplifies an entrepreneurial spirit rooted in innovation and cultural identity, showcasing how personal experiences can drive business development. Founded by the Garza family, the company arose from Veronica’s health struggles and a collective desire to create gluten-free alternatives to traditional Mexican foods. This personal motivation, combined with their commitment to family heritage, illustrates how entrepreneurs can leverage their backgrounds and experiences to identify market gaps. By transforming their kitchen experiments into viable products, the Garzas validated their business idea through community engagement and grassroots marketing, laying a foundation for their eventual growth. Their early strategies, like producing tortillas in a rented kitchen and gathering feedback from friends, underscore the importance of iterative development and market testing in entrepreneurship. Siete’s journey further highlights critical aspects of scaling a business, such as securing investment and navigating distribution challenges. The family’s ability to pivot from small- scale production to partnering with larger retailers like Whole Foods showcases how strategic partnerships are essential for growth. Participation in the SKU accelerator program provided crucial mentorship and connected the Garzas to valuable resources, enabling them to automate production and meet rising demand. Additionally, their commitment to supporting other Latino-owned brands through initiatives like the Juntos Fund illustrates a socially responsible business model that resonates with consumers’ values today. Siete’s rise underscores how culturally driven entrepreneurship can tap into larger market trends,
appealing to a demographic that values authenticity and heritage, creating a sustainable and impactful business.
Discussion Questions and Suggested Answers
- Which of the six features of modern entrepreneurship can you identify in the Garzas’ story? a. Sample Answer: The Siete Family Foods case illustrates several features of modern entrepreneurship. The founders of the company thought differently and were effectual entrepreneurs. They were able to start small and use what they had to get their business off the ground and running. They exemplified the feature of acting more than planning, validating their ideas through market testing, and being flexible enough to adopt changes when needed. Finally, they weren’t driven by profit, but rather by the need to fill a gap they saw in the market. Their personal health journey heavily influenced their desire to create gluten-free foods that aligned with their personal heritage.
- The Entrepreneurship Method is about taking action under conditions of uncertainty. Do you see evidence of the Method during the creation of Siete Family Foods? a. Sample Answer: Yes, Siete Family Foods used uncertain or tenuous situations to continue to progress forward and continue to build their brand and business. This is evidenced by their continued growth despite setbacks such as destroyed products. The Garza Family used this uncertain time period to professionalize their operations through automation and outsourcing to meet both growing demand and a need for more efficient production capabilities. They used resources at their disposal and the support of others in the industry to evaluate the needs of the product line and meet changing market conditions.
- As you think about doing something entrepreneurial, today or someday, what is your motivation for doing so? a. Sample Answer: A motivation for moving into the entrepreneurial field can be to create positive change in the marketplace through innovation. In offering products or services that meet customer needs in a new way, entrepreneurs can be a positive force for good in the industry. b. Student answers related to personal motivation for being an entrepreneur will vary.
Note: In this guide, some suggested answers are provided. Most of these questions are there to make students think and interrelate concepts from the current and previous chapters and, hopefully, to generate a more integrated understanding of the topic. However, some responses will be a matter of opinion or are used to assess critical and creative thinking and one’s ability to justify one’s decision. Thus, the answers for the case questions are not the only right answer, and so at times we don’t provide an in-depth sample answer.
- Think about Sara Blakely’s early career before starting Spanx. How did this contribute to her developing an entrepreneurial mindset? a. Sample Answer: Blakely’s work as a salesperson influenced her ability to be innovative and agile in her mindset. The cold-calling technique required by her position gave her the ability to face rejection and grow from each experience with it. She saw firsthand the importance of recognizing opportunities in the market and capitalizing on them. Her experience with sales created a resilient and adaptable mindset that served her well in her entrepreneurial endeavors.
- Follow Sara Blakely on Instagram. Does she exhibit a fixed or growth mindset? What evidence contributes to your answer. a. Sample Answer: Blakely exhibits a growth mindset. Her Instagram is focused on change and adaptability, showcasing how she supports women as entrepreneurs and the value of innovation and change in the industry. She consistently exemplifies the attributes of willingness to learn, inspiring others, and effort and attitude as determinants of success.
- What evidence do you see in the creation of Spanx where Blakely exhibited resiliency and acting under conditions of uncertainty? a. Sample Answer: Spanx started from an idea for a product that would be helpful and valuable to a specific demographic. Blakely persevered through multiple difficulties in obtaining a patent attorney—eventually writing the application herself. She continued to exhibit resiliency during product development as she uncovered a severe lack of women’s representation in the process. She continually acted under conditions of uncertainty, from not knowing whether she would be able to obtain a patent or develop her product to not knowing if her product would be well received by customers and retailers.
Note: In this guide, some suggested answers are provided. Most of these questions are there to make students think and interrelate concepts from the current and previous chapters and, hopefully, to generate a more integrated understanding of the topic. However, some responses will be a matter of opinion or are used to assess critical and creative thinking and one's ability to justify one's decision. Thus, the answers for the case questions are not the only right answer and so at times we don't provide an in-depth sample answer.
Case Notes
Chapter 3: Facilitating Social Entrepreneurship
Case Study: MUD Jeans, Bert van Son
Case Summary
The global fashion industry, valued at $1.7 trillion, employs nearly 13% of the global workforce, with significant environmental repercussions, including high carbon emissions and massive waste generation. Bert van Son, a fashion industry veteran, founded MUD Jeans in 2012 to address these issues through a circular economy model in which old jeans are recycled into new products, promoting sustainability without sacrificing style. Customers can lease or purchase jeans and then return them for recycling, which encourages responsible consumption and reduces environmental impact. MUD Jeans exemplifies how ethical production and innovative business models can inspire sustainability within the fashion industry.
Analysis
The case study for MUD Jeans exemplifies the transformative potential of social entrepreneurship within the fashion industry, particularly through its innovative circular economy model. Bert van Son’s approach addresses the pressing environmental issues tied to conventional fashion practices, such as high pollution rates and waste generation. By rethinking the lifecycle of denim products from production to disposal, MUD Jeans not only promotes sustainability but also engages consumers as active participants in reducing waste. This shift from a linear to a circular model represents a significant departure from traditional profit-driven models, demonstrating how businesses can operate with a dual focus on profitability and ecological responsibility.
Furthermore, MUD Jeans’ commitment to ethical manufacturing in Tunisia and its use of high-quality, organic materials reflect a holistic understanding of social entrepreneurship, wherein the company prioritizes both environmental sustainability and fair labor practices. The challenges van Son faced, such as consumer perception of recycled goods and securing financial backing, underscore the difficulties inherent in pioneering a socially responsible business model in a competitive market. However, MUD Jeans’ success serves as a crucial case study for other fashion enterprises, illustrating that sustainable practices can not only align with but also enhance business objectives, ultimately paving the way for a more responsible and conscious fashion industry.
Discussion Questions and Suggested Answers
- Where do you see the 5 elements of social innovation in the case of MUD Jeans? a. Sample Answer: MUD Jeans exemplifies all five elements of social innovation. The company met a social need through sustainable practices, introduced an innovative element through the circular business model, and created an actionable revenue and business model. It also improved the process of recycling and product development and created strong relationships with designers, manufacturers, and customers to get buy-in on the selling and purchase of recycled jeans.
Case Notes
Chapter 4: Creating and Recognizing New Opportunities
Case Study: Madison Reed, Amy Errett
Case Summary
Amy Errett founded Madison Reed after a frustrating experience shopping for hair color, which revealed a lack of quality and clarity in the market. Drawing on her extensive business background, she identified an opportunity to provide salon-quality hair color at home, combining beauty and technology to meet consumer needs. Madison Reed offers a unique experience with an innovative color-matching algorithm, professional support, and the introduction of "Color Bars" for efficient salon services. Since its launch in 2014, the company has raised significant funding, opened numerous locations, and built a strong omnichannel presence, reinforcing Errett’s belief that women deserve better in their beauty products and experiences.
Analysis
Amy Errett's journey from a simple shopping trip to the creation of Madison Reed illustrates the pivotal role of personal experience in identifying entrepreneurial opportunities. Frustrated by the overwhelming and unsatisfactory options in the hair color aisle, Errett realized that there was a significant gap in the market, which led her to explore the broader landscape of the hair care industry. Her background in finance and consumer brands provided her with the tools to assess market potential and consumer needs, as she recognized that the hair color segment was both emotionally charged and underserved. The hair care market's size, projected growth, and the recurring nature of color treatments highlighted an opportunity for innovation. Errett’s approach—leveraging technology to improve user experience and product quality—demonstrates a fusion of industry insights and understanding of personal pain points, making her entrepreneurial venture both relevant and timely.
Madison Reed's development is a testament to the importance of addressing consumer pain points through innovative solutions. The implementation of a proprietary color-matching algorithm and a responsive customer service model via AI showcases how technology can enhance customer experience and build brand loyalty. Furthermore, the establishment of Color Bars addresses inefficiencies in traditional salons, optimizing service delivery while maintaining quality. Madison Reed's strategy, which seamlessly integrates online and brick- and-mortar experiences, reflects a deep understanding of consumer behavior and market dynamics, ensuring sustained growth and engagement. Through her vision, Errett has not only created a successful business but also redefined consumer expectations in the beauty industry, empowering women to embrace their beauty confidently.
Discussion Questions and Suggested Answers
- What headache problems is Errett solving with Madison Reed? a. Sample Answer: Errett is working to solve the issue of substandard ingredients and materials used in women’s hair color and care products. The problem affects millions of women who are seeking to color their hair but are often met with a plethora of choices that are not meeting their needs. A secondary headache problem is having to shop for and select at-home hair coloring products as an individual, having to choose between a low-price box dye or expensive salon appointment, with no options in between.
- Describe the importance of alertness in the context of Errett’s entrepreneurial journey. a. Sample Answer: Alertness is what gives successful entrepreneurs a leg up in the field; it allows them to scan the environment and identify opportunities quickly. In Errett’s case, she identified an opportunity by using her personal experience shopping for hair dye. Her alertness to the types of products that were offered and how they may be insufficient in meeting women’s needs created a window of opportunity for her to develop something better that filled a gap in the market.
- Errett took her initial idea—disrupt the hair color market—and generated opportunities in multiple channels: online, brick-and-mortar, and retail. Describe how you might expand an idea of your own into several different directions. a. Sample Answer: Students’ answers will vary here based on their own personal ideas or experiences. For example, a student looking to develop a performance athletic product may describe how they can use online customer experiences connected to pop-up shops at athletic events to generate opportunities in multiple channels. A correct answer will include some plan to incorporate multiple distribution channels into a single product or service launch.
Note: In this guide, some suggested answers are provided. Most of these questions are there to make students think and interrelate concepts from the current and previous chapters and, hopefully, to generate a more integrated understanding of the topic. However, some responses will be a matter of opinion or are used to assess critical and creative thinking and one's ability to justify one's decision. Thus, the answers for the case questions are not the only right answer and so at times we don't provide an in-depth sample answer.
Case Notes
countless other professors and students who helped better formulate his design thinking process.
- The journey of Ventureblocks is populated with many tests, experiments, and prototypes.
Where do you think VentureBlocks would be today if Anton had simply written a business plan and started the business? Why?
a. Sample Answer: VentureBlocks may not exist today if Anton had simply written a business plan and started the business. Simply put, all the testing, experimentation, and prototypes helped Anton narrow his design thinking within an actionable scope.
- How might you apply design thinking to your own academic endeavors to maximize your potential for success and graduation? a. Sample Answer: Answers will vary from student to student. It should be noted, however, that the same inspiration — ideation — implementation model applies generally to every design-thinking situation. As such, maximizing one’s potential in one’s current studies as well as one’s future business ventures and personal relationships will be contingent on getting inspired (through reading, studying, observing, and seeking out positive mentors), generating ideas through action (through getting educated, discovering one’s options, and seeking out guidance from experts), and then proactively and persistently investing the hard work and effort required to actually implement your ideas/plans.
Case Notes
Chapter 6: Building Business Models
Case Study: Airbnb
Case Summary
Airbnb was born from a simple email in 2007 when Joe Gebbia suggested turning his apartment into a temporary bed and breakfast during a design conference in San Francisco. Despite initial challenges and skepticism, the founders pivoted their concept, rebranding from "AirBed & Breakfast" to "Airbnb" and focusing on building trust between hosts and guests through ratings and reviews. With innovative features and a commitment to creating unique travel experiences, Airbnb has since grown into a global platform valued at over $ billion, revolutionizing the hospitality industry.
Analysis
The emergence of Airbnb represents a transformative business model that capitalizes on the concept of the sharing economy. Initially conceived to monetize unused space during a
conference, the founders quickly evolved their approach to create a two-sided marketplace that connects hosts and guests. This model leverages the assets of everyday individuals— homes and unique experiences—while minimizing overhead costs typically associated with traditional hotels. By allowing hosts to set prices and manage listings, Airbnb not only provides flexibility for hosts but also offers guests a diverse array of accommodation options. This flexibility is central to Airbnb's value proposition, enabling it to compete effectively against established hotel chains by providing authentic, localized experiences that are often absent in conventional hospitality settings.
Airbnb's business model has continued to adapt and diversify in response to market demands and regulatory challenges. By introducing features like guest reviews and ratings, the platform established a culture of trust, which was essential for fostering user confidence. Additionally, Airbnb has expanded its offerings beyond simple accommodations to include unique experiences, corporate travel solutions, and luxury options, enhancing its appeal to various customer segments. This continuous evolution reflects an understanding of market dynamics and customer needs, positioning Airbnb as a leader in the travel industry. Despite regulatory hurdles and safety concerns, the company's ability to innovate and respond to stakeholder feedback has solidified its place in the market and allowed it to achieve significant valuation milestones.
Discussion Questions and Suggested Answers
- How did Airbnb’s early business model differ from its current model, and what factors contributed to this evolution? a. Sample Answer: The early iterations of Airbnb focused on renting out a single room or space to a guest. However, more recent iterations of the business model expanded to more diverse offerings to include a wider array of target populations. The current business model focuses on continuing to foster trust between host and guest while pushing the boundaries of what the sharing economy is and how Airbnb fits into the space. The evolution of the business model from its earliest iterations was pushed forward by feedback from stakeholders and a growing concern over safety and regulatory conditions.
- What challenges has Airbnb faced in terms of regulation and safety, and how have they addressed these issues? a. Sample Answer: Airbnb places a lot of trust and faith in hosts and guests. The introduction of two-way ratings and reviews worked to alleviate some of the trust and safety issues facing the company. The introduction of chat features and Super Hosts also worked to facilitate trust and improve guest and host safety. Regulatory concerns were brought forward from more traditional hotels, who viewed Airbnb as a threat to their industry. The push for additional taxation and in some cases, outright bans, of Airbnb in cities has led the company to diversity their offerings, pivoting to include not just home rentals, but also cultivated unique experiences and events.
challenges, which not only captured attention but also fostered a loyal community around his content. By consistently creating engaging and unique videos, he established a reliable connection with his audience, ensuring that they looked forward to new uploads and felt a sense of belonging within his fanbase.
Moreover, Donaldson's entrepreneurial strategy extends beyond content creation to brand diversification and engagement. His willingness to invest in high-quality production and collaborate with other creators expanded his reach and attracted new audiences. The introduction of initiatives like MrBeast Burger and Feastables illustrates his ability to leverage his YouTube fame to create additional revenue streams while promoting engagement through interactive marketing tactics. However, his ventures have also sparked discussions about the ethics of content creation, especially in the context of philanthropy. By addressing critiques and maintaining transparency about his intentions, Donaldson has worked to balance his business ambitions with genuine community impact, reinforcing his brand loyalty and sustaining growth across various platforms. Ultimately, MrBeast’s success highlights the importance of adaptability, audience engagement, and strategic investment in developing a strong customer base.
Discussion Questions and Suggested Answers
- Describe the different types of customers that Donaldson must appeal to, including his viewers and sponsors. How has Donaldson’s approach been able to satisfy both? a. Sample Answer: The monetization model that Donaldson uses means that he has several different customer groups that he must satisfy. The first group is the end-user, or customer. Donaldson continually creates content and products that appeal to a range of target customers and uses research-based knowledge to determine what content will be the most successful in appealing to his fan base. However, the success of his content directly correlates to the size and type of sponsors he can gain for his channel. Sponsors are a main revenue component for content creators, and Donaldson must continue to incorporate sponsored ads into content without alienating customers or viewers in the process.
- Create a customer journey map that outlines the experience of a subscriber to Donaldson’s YouTube channel. To help you with this exercise, find Donaldson’s channel and watch one of his videos yourself! a. Sample Answer: The typical five stages of a customer journey include discovery, research, purchase, delivery, and after-sale. While subscribers to a YouTube channel are not typically physically purchasing a product, they do follow a similar journey. i. Discovery: A viewer is looking for entertaining videos to watch in their free time. ii. Research: A viewer watches several of Donaldson’s videos to see if they enjoy the content or find it valuable. iii. Purchase: A viewer decides to subscribe to the channel.
iv. Delivery: Donaldson must continue to provide content that is entertaining and valuable to the customer. v. After-Sales: The viewer responds to and comments on videos, which Donaldson acknowledges and responds to.
- Analyze the role of research in Donaldson’s experience as an entrepreneur. How has it helped him grow his business? a. Sample Answer: Research has been an integral part of Donaldson’s success in the industry. He uses data-driven information to determine the type of content that is valuable to consumers and has the potential to go viral. The more successful his videos are, the more sponsor revenue he can gain. He not only researched the type of content that was popular but also gained insight into how the algorithms worked in displaying content to subscribers and new viewers.
Note: In this guide, some suggested answers are provided. Most of these questions are there to make students think and interrelate concepts from the current and previous chapters and, hopefully, to generate a more integrated understanding of the topic. However, some responses will be a matter of opinion or are used to assess critical and creative thinking and one's ability to justify one's decision. Thus, the answers for the case questions are not the only right answer and so at times we don't provide an in-depth sample answer.
Case Notes
Chapter 8: Testing and Experimenting With New Ideas
Case Study: Katrina Lake, Stitch Fix
Case Summary
Katrina Lake, who saw firsthand how large retail companies were actively avoiding addressing many of fashion customer’s pain points, started Stitch Fix as a means to bring cost conscious personalization back to fashion in an age where it was dying in front of everyone. The former consultant took on the increasing depersonalized trends in e-commerce and created Stitch Fix, a personalized fashion e-commerce site. Katrina took Stitch Fix public in 2017 and in 2018 the company was valued at $2.8 billion.
Analysis
A lot of time conducting thoughtful research and intentional experimentation were the keys to Stitch Fix’s success. Katrina identified a problem very early on in her career, but did not
Case Notes
Chapter 9: Developing Networks and Building Teams
Case Study: Shonda Rhimes, Shondaland
Case Summary
Shonda Rhimes, known for her prolific work with Shondaland, has transformed the media landscape since founding her production company in 2005, initially for Grey's Anatomy. Shondaland has since evolved into a diverse media powerhouse, producing a wide range of content, including television, podcasts, and films, while maintaining a commitment to intentional team building and empowering her employees. Rhimes emphasizes recruiting trusted individuals from her network and fostering their growth, resulting in a collaborative environment that reflects diversity organically. Despite her immense success and contributions, Rhimes has faced challenges in achieving equitable compensation, reinforcing her mission to celebrate and acknowledge the greatness of her team and their work.
Analysis
The case study highlights Shonda Rhimes's approach to team building within her production company, Shondaland, showcasing her commitment to intentional and thoughtful team dynamics. Unlike typical entrepreneurial strategies that prioritize rapid growth and filling positions quickly, Rhimes emphasizes the importance of assembling a cohesive team based on trust, shared values, and long-term relationships. Her partnership with Betsy Beers serves as a prime example; their initial connection and collaborative chemistry laid the foundation for not only the success of Grey’s Anatomy but also the broader vision of Shondaland. This deliberate approach fosters a stable environment that enables creativity and innovation, contrasting with the high-pressure, fast-paced culture often found in media production.
Moreover, Rhimes’s strategy reflects a deep understanding of diversity not as a checkbox but as a natural outcome of building a team that genuinely mirrors the world. By recruiting from her trusted network rather than adhering to traditional hiring metrics, she cultivates a diverse and capable workforce that contributes to more authentic storytelling. This method not only enhances the quality of her productions but also empowers her employees through mentorship and professional development. Rhimes’s recognition of the systemic undervaluation of her contributions underscores the significance of creating an environment that celebrates talent and fosters growth, ultimately shaping a legacy of representation and excellence in the media industry.
Discussion Questions and Suggested Answers
- At what point is it worth bringing together a team, knowing it might mean giving up equity, control, or other forms of power?
a. Sample Answer: Entrepreneurial teams have often seen more success than solo entrepreneurs. Team members can be valuable in building a new business or brand, bringing a diverse set of skills, a new viewpoint, and a fresh set of eyes to the project. It is worth bringing together a team when an entrepreneur reaches a point where they would benefit from expertise in areas that are beyond their own scope of knowledge. Finding team members of cofounders that are knowledgeable in diverse areas can be integral to the success of a venture.
- Many people see entrepreneurship as working for yourself, calling the shots, and having full control over the business. In considering Shonda Rhimes’s experience, how might entrepreneurship be different than what many have traditionally come to understand? a. Sample Answer: Most traditional views see entrepreneurship as a solo venture, a single individual introducing a project to the world. However, Rhimes’s experience exemplifies the entrepreneurial team model, where a founding team with a diverse set of skills works together to bring a vision to life. Rhimes demonstrated that it is possible to be an entrepreneur while working with a team of individuals whom you trust and who believe in the same idea or vision that you do.
- How has networking and team building been critical to Rhimes’s continued success? a. Sample Answer: Networking and team building are integral to Rhimes’s continued success. She has focused on collaborating with individuals that share her passion and vision, building trust throughout the process. She built her team by engaging and investing in people in her network. Her focus on the personal and professional growth of her team increases their dedication to and belief in her venture.
- What do you think about Rhimes’s approach to team building? What parts of her approach might you enjoy or use in the future? What might you avoid? a. Sample Answer: Students’ answers may vary based on their personal opinions. A sample answer may include: b. Rhimes’s approach to team building is to build trust and foster growth in her team. I think Rhimes’s approach helps to build a more committed and dedicated team as well as a strong brand. There are several parts of her approach that I would use in the future. The idea of encouraging growth in her team at the personal and professional level is a key to building a good team. A team is only as strong as its weakest member, and it benefits not just the team, but the individual as well to help them gain knowledge, skills, and experience—whether they remain with your organization or not. I do find it interesting that she recruits from only within her own network. That may lead to missed opportunities down the road as people who may not have had the opportunity to connect with her would be valuable assets to the team.
crisis. This not only helped the company survive but also enhanced its reputation as a socially responsible entity. Ultimately, Coder's commitment to her core mission led to a renewed focus on period products, illustrating how a well-defined purpose can guide revenue model decisions and inspire investor confidence. The evolution of Aunt Flow's revenue models— from B2C to B2B and back—demonstrates the need for entrepreneurs to remain flexible and responsive to market demands while staying true to their foundational missions.
Discussion Questions and Suggested Answers
- Which of the ten revenue models discussed in this chapter can you identify in Coder’s story? a. Sample Answer: Coder and Aunt Flow illustrated a combination of revenue models in their business. The company began using a subscription-based model, where customers were able to subscribe to monthly delivery of products. As the company evolved, they incorporated a unit sales model based on how many products were sold. The argument can also be made that Aunt Flow employed a professional revenue model by offering to install dispensers and products on a contractual basis for other organizations.
- How do customers, frequency, the selling process, and price drive Aunt Flow’s revenue? Explain. a. Sample Answer: Customers drive revenue for Aunt Flow by being the end- user or purchaser of the product. Without customers, a business would not be able to create revenue. Frequency is a key driver for Aunt Flow’s revenue. Customers will need to repurchase products in both the consumer and business sectors. The third driver, the selling process, influences how the product gets into the hands of the end user. The process for Aunt Flow includes the ability to offer cross-products like dispensers and pivot production to other needs when an area sees a decrease in use, like moving from menstruation products to PPE. The final revenue driver is price. Aunt Flow needs to determine what a customer is willing to pay for the product. If the offering is over consumers’ threshold of willingness to pay, revenue will be negatively impacted.
- What other avenues could Aunt Flow explore to continue to grow and find new sources of revenue? Brainstorm three ideas. a. Sample Answer: Students’ answers will vary here based on personal experiences and the ideas that they are able to generate. Answers should focus on finding new ways to create revenue or utilizing different revenue models. For example, a student may mention the use of an advertising sales model that allows businesses to place ads on dispensers or product packaging. Another sample idea may be data revenue gained by selling unique data sets based on customer use and frequency to other complementary businesses.
Note: In this guide, some suggested answers are provided. Most of these questions are there to make students think and interrelate concepts from the current and previous chapters and, hopefully, to generate a more integrated understanding of the topic. However, some responses will be a matter of opinion or are used to assess critical and creative thinking and one's ability to justify one's decision. Thus, the answers for the case questions are not the only right answer and so at times we don't provide an in-depth sample answer.
Case Notes
Chapter 11: Anticipating Failure
Case Study: ToyGaroo, Nikki Pope
Case Summary
Nikki Pope founded ToyGaroo, a toy subscription service dubbed "the Netflix of toys," and secured $200,000 in funding on Shark Tank in 2011. Despite an initial spike in subscriptions, the company faced significant challenges with sourcing toys and high shipping costs, leading to its bankruptcy just over a year later. Rapid growth overwhelmed the small team, resulting in logistical issues and unsustainable financial practices and highlighting the risks of scaling too quickly without adequate infrastructure. Ultimately, ToyGaroo serves as a cautionary tale about the pitfalls of entrepreneurial success that outpaces operational capacity.
Analysis
The story of ToyGaroo serves as a poignant case study in the volatile intersection of entrepreneurship and failure, highlighting the perils of rapid growth and misaligned business models. While Nikki Pope's pitch on Shark Tank successfully secured substantial investment, the company struggled with fundamental operational challenges that undermined its initial promise. The ambitious idea of creating "the Netflix of toys" relied on a subscription model that seemed appealing on the surface; however, the complexities of sourcing and shipping toys proved overwhelming. The company's decision to offer free shipping, akin to Netflix, became a significant financial burden as the diverse nature of toys led to unexpected costs. This miscalculation reflects a common entrepreneurial pitfall: the tendency to prioritize growth and visibility over sustainable practices and profitability.
Moreover, the rapid influx of new customers post-show exposed critical weaknesses in ToyGaroo's infrastructure. With an inability to scale operations effectively, the founders faced logistical nightmares, inventory mismanagement, and staffing shortages. The pressure from investors to accelerate growth further exacerbated these issues, illustrating how external expectations can derail a startup's carefully laid plans. Ultimately, ToyGaroo's journey underscores the need for entrepreneurs to balance ambition with strategic planning, ensuring
